NEW BUSINESS MODEL FOR A FREIGHT FOR WARDING COMPANY

Abstract

For few decades, an emergence of logistics providers has changed interactions of parties and stakeholders in a supply chain. Instead of operating and owning capitals, manufactures have focused on their core competency, while logistics providers have offered professional services and benefited from economy of scales. As logistic services become more popular, a logistics provider tends to expand its services to cover additional aspects in a supply chain. The objective of this thesis is to study a possible expansion of a case study freight forwarder company that spacialises in cross-border logistics services. Requested by its major customer to provide an additional warehousing service, the freight forwarder faces with the key decisions: - What are the business merits of this expansion to the freight forwarder? - Should the freight forwarder provide the warehousing service? If so, how? To answer these questions, the standard business model is used as a framework to identify the value proposition as well as its revenue streams and cost structure. Having identified the business merits, historical data and public information are gathered and served as design parameters to specific space, workforce, and equipment required in a warehouse. These parameters are critical for the last decision as they are independent of the ownership of a warehouse. The site selection of a rent warehouse is evaluated by panel of experts on key dimension, particularly rental fee, condition, distances, accessibility, flexibility and credibility. The best rental candidate site is compared with the private warehouse that may be constructed on a company’s own land near a seaport using Economics matrix such as Net Present Value, Internal Rate of return, and pay-back period. During the 20-year time horizon, the comparison reveals the freight forwarder should build and operate its own warehouse. The sensitivity analysis shows that the greatest risk to this logistics endeavor is the volume of freight.